A Guide to the E-invoicing Universe in Mexico

What do all the Spanish words and phrases associated with Mexican e-invoicing mean, and what do companies doing business there need to know as they navigate around them? Here is a map to the Mexican e-invoicing universe.

Want to know more? Learn how Sovos has more than a decade of experience helping companies navigate Mexican e-invoicing mandates.

 

Infographic: State 1099 Reporting Deadlines

By far, the biggest challenge facing organizations during 1099 reporting season this year was state reporting. With states tightening deadlines and multiple jurisdictions and reporting thresholds to deal with, Sovos customers found state reporting more complex than any other element of reporting season.

This updated infographic shows why. The map shows 1099 reporting deadlines by earliest deadline per state. In just a few years, the vast majority of 1099 first deadlines have shifted from March to January. Combine that shift with changing thresholds for 1099-K forms and other state-specific policies, and it is clear why state reporting has become such a challenge and will likely continue to be.

 

With reporting periods shrinking, organizations need to centralize and automate reporting processes in order to maximize efficiency, ensure compliance and avoid financial penalties.
Find out how Sovos can help.

Global Taxation is

Going Digital

Here's How to Prepare

An underappreciated revolution--the shift to digital taxation--is underway. More and more countries are requiring businesses to comply with a new model of tax reporting and compliance.

This is the digital transformation of tax: a climate in which global tax authorities demand more e-invoicing and e-reporting—which will likely lead to more e-assessments and e-audits. Here, we explore the transformation and offer a clear path forward for business and technology leaders to tackle its challenges and leverage opportunities.

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To date, about 30 countries have implemented some form of digital tax reporting or collection requirement—and many of those early movers are developing nations such as Brazil and Mexico. As Intra-European Organisation of Tax Administrations Executive Secretary Miguel Silva Pinto explains, a primary motivator moving developing countries toward digital processes is that “digitization is a highly effective means of countering fraud.”

But going forward, more nations—including developed economies—will up the ante on digital reporting requirements. Not only will the information collected swell to include more intimate details around corporate operations, it will also shift from taxpayer-submitted to government-issued returns.

“The rise of digital taxation turns the traditional tax collector-taxpayer relationship on its head,” says Carolyn Bailey, partner at Ernst & Young’s Tax Services. In a Forbes Insights survey of 250+ senior executives, majorities of cross-industry finance, tax and IT leaders report experiencing a variety of trends in digital taxation.

Companies Face New Requirements

80%
of leaders experience
localization
which requires that tax software and reporting processes meet local regulations
64%
of leaders experience
e-Reporting
which replaces manual periodic form filing of summary information to online transmission of files with transaction data
64%
of leaders experience
e-Accounting
which requires businesses to transmit entire accounting ledgers to the tax administration or maintain accounts hosted by the tax administration based on their own transaction data
56%
of leaders experience
e-Invoicing
which mandates the use of e-invoices and real-time submission to the tax administration
Previous
Next
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The switch to digital taxation introduces a variety of challenges, risks and costs: some are immediate and tactical, while others are longer-term and strategic.

The Challenge of Digital Taxation

Transparency

Tax authorities will have a clearer window into a company’s tax operations

Smarter Tools

Advanced analytics and AI will monitor consistency, track compliance and more precisely choose audit targets

Scrutiny

This unprecedented visibility means more intrusive controls, higher income assessments and the potential for tax controversy

Short-term Challenges

Initially, companies will need to tweak or even overhaul their invoicing, payment, enterprise resource planning (ERP) or other financial systems. Challenges will multiply as individual jurisdictions implement and continuously update digital requirements and more nations join the fray.

Meeting multiple requirements on short timelines across a growing list of jurisdictions can lead to a patchwork of solutions amid a diversion of scarce local IT and tax resources. But failure to achieve compliance in real-time reporting of transactions impacting VAT and broader taxation leads to fines, business disruption and damaged reputations.

Long-term Challenges

Digitization of taxation is part of an even larger trend—the shift to sharing more intimate information with tax authorities, a process accelerated by the OECD’s Base Erosion and Profit Shifting initiative (BEPS).

Digitization of so much data “becomes tax disclosure on steroids,” says Bailey. Soon enough, there will be jurisdictions applying advanced analytics and AI to scrutinize enterprises in search of evidence that can be used to levy higher assessments.

“More nations will be collecting massive amounts of information about not only individual companies, but entire industries, giving authorities an unprecedented window into operations and profitability.

Carolyn Bailey

Partner, EY Tax Services
Digital Tax Administration Services

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The path forward can be daunting for business leaders: 57% say that responding to digital taxation represents a significant challenge for their company. Forbes Insights research findings and Bailey’s guidance can help business leaders create an explicit strategy.

Your Transformation Agenda

Take Inventory

“Take inventory of where you’re operating and where these requirements are being introduced,” recommends Bailey. It’s essential “to gain an understanding of the deadlines and to find out about penalties and enforcement.” Inventories should also take into account future investments.

Centralize & Standardize

83% of surveyed executives say they will be taking steps to move global taxation into a more centralized model. Greater centralization will eliminate the need for local IT patches and workarounds, in turn creating “opportunity for companies to achieve greater standardization,” says Bailey.

Streamline

The shift to digital processes—and away from manual, paper-based and often error-prone single-country systems—presents an opportunity to reduce costs while improving quality and efficiency.

Outsource

Executives are seeking assistance from specialists with expertise in digital VAT/GST operations around the world, as well as working more closely with ERP and other financial software providers. Most will be hiring additional IT and tax staff at headquarters and locally.

Collaborate

Perhaps the greatest necessity is to unite leaders across functions and processes. This begins with IT and tax, but also includes the broader finance, operations and strategic planning teams.

Turn Risks Into Opportunity

Synchronize Solutions

A comprehensive response is essential. Many companies need country-specific e-invoicing and related tax solutions, which requires a more systematic approach. And as tax authorities leverage their increased insight, companies must also prepare for more intrusive tax administration controls, tax controversy and intense scrutiny on transfer pricing. A coordinated response linking core business processes and ERP systems with new interfaces and improved solutions for reporting and compliance can significantly reduce costs and risks.

Dig Into Data

Greater standardization of information exchanged with tax administration platforms leads to vast new caches of mineable data. Tools like AI could help sift through detailed cost, revenue and related operational data, leading to more optimal decisions and strategies. Companies can also leverage the same data and tools to proactively scour their business models for tax efficiency and compliance—allowing for improved tax planning, contemporaneous documentation and justification of transfer pricing policies. 

Overall, the trend is clear and unavoidable: taxation is going digital. The best way forward is to use this as an opportunity to improve business outcomes.

Brazil: Electronic Invoicing and Reporting Requirements

In 2008, Brazil adopted a clearance electronic invoicing model in which the country’s tax authority must receive and clear an invoice before a supplier can issue it to a payer. More than a decade later, the Brazilian tax administration’s digitization has evolved so much that other tax administrations call Brazil the Google of fiscal goods. 

Current regulations include electronic invoices for: supplies of goods (NF-e), services (NFS-e), transport services (CT-e), freight (MDF-e), SPED, REINF and, more recently, for the supply of electricity (NF3e). 

This document provides an overview of the mandates and regulations in Brazil.

Mexico: Electronic Invoicing and Reporting Requirements

Mexico is a pioneer in electronic invoicing and VAT enforcement, having begun its digitization journey in 2010. Today, Mexico has one of the most technologically advanced tax administrations in the world. Companies unaware of or unprepared for Mexican e-invoicing mandates could face significant fines and penalties, along with supply-chain disruptions and cash-flow issues. This document provides an overview of mandates and regulations in Mexico.

Growing Pains: Tax Information Reporting Obstacles

Companies operating in the technology space often see rapid growth. However, leaders may be blindsided by multiple Tax Information Reporting obstacles that can cripple their progress.

See the infographic below to learn more.

Cyber Monday 2019 – Sales Tax Preparation Key to Success

Cyber Monday 2019 is anticipated to be one of the most challenging to date for ecommerce and finance teams. More spending, in fewer days, and many more states imposing economic nexus, may subject more online retailers to sales or use tax collection and remittance responsibilities.

5 Sales and Use Tax Questions Every Manufacturer Must Ask

Manufacturers face increasingly complex sales and use tax requirements, but are not always aware of what challenges lay ahead in the short- and long-term. Knowing the right questions to ask is an essential first step toward understanding how sales tax developments impact the manufacturing industry.

7 Steps to Integrating Sales Tax with Your S/4HANA Migration Journey

Migrating to S/4HANA is a big and complicated process for most organizations. It also represents a tremendous opportunity to update and align your tax strategy to meet the challenges of modern sales tax.

Sovos outlines best practices for SAP S/4HANA migration in seven easy to follow steps.

The SAP Backstory:

When SAP announced that it was extending support for its Business Suite 7 software suite until the end of 2027 many breathed a sigh of relief. However, doing so may be lulling yourself into a false sense of security.

While SAP adjusted its timeline, largely due to increasing customer pressure, it’s important to remember that governments have no such plans to alter their course of action and will not yield on integrating new regulatory standards for businesses to comply with. Especially in the aftermath of the COVID-19 pandemic.

Despite the respite provided by SAP, the pace of global regulatory change towards continuous controls and digitization continues to accelerate. And many businesses, unless they take action soon will be left scrambling to meet the demands of new regulatory standards.

Why Involve Tax Early:

Tax is a critical player in generating increased financial transparency and ensuring necessary cash flow, yet they have lived on the periphery of many important IT decisions and organizations are doing themselves a disservice by excluding Tax as part of their S/4HANA strategy. 

Tax departments continue to make do with legacy solutions which are ultimately not sustainable.  Too often Tax is forced to choose between efficiency and accuracy. This is a losing strategy that results in either valuable resources being tied up for non-revenue generating activities or assuming the risk of noncompliance.

Considering tax early and correctly is vital, and this is the perfect opportunity to take ownership of your tax processes. The time for standing on the sidelines has long since passed.

Migrating to a new platform is hard. SAP understands this better than anyone. As Co-CEO Christian Klein has said, “We know that our customers have deep business transformations underway… SAP will provide additional flexibility to fully embrace the groundbreaking opportunities of SAP S/4HANA that reflects the individual pace and complexity of our customers’ projects.”

Translation, this is a long and complicated process. Companies need to start early to fully integrate with and launch the new platform.

Our advice? Don’t wait to get your tax and regulatory issues settled. No matter which course of action SAP decides, governments have made their position clear and they are full steam ahead with enforcement.

The future direction for most companies includes the move to S/4HANA and Sovos remains committed to assisting you in this process.

The Four Emerging Megatrends in VAT

The 12th edition of our annual Trends Report, VAT Trends: Toward Continuous Transaction Controls, puts the spotlight on current and near-term legal requirements across regions and VAT compliance domains, including the four emerging megatrends that have businesses of all sizes and industries on notice. Download your complimentary copy of the report.

Sovos’ team of global regulatory experts exists to help businesses respond to the digitization of tax. We focus our efforts on simplifying the multiple layers of complexity, so customers can focus on growing their businesses. In this report we take a comprehensive look at the regulatory landscape as governments across the globe are enacting complex new policies to enforce VAT mandates, obtain unprecedented insight into economic data and close revenue gaps.

Authored by a team of international tax compliance experts, the Sovos Trends Report includes extensive recommendations on how companies can prepare for and thrive through these changes. The focus of this year’s edition is on four emerging megatrends with potential to drive change in the way organizations approach regulatory reporting and manage compliance.

Previewing the mega-trends:

  • Continuous Transaction Controls (CTCs) – Countries with existing CTC regimes are seeing improvements in revenue collection and economic transparency.
  • A shift toward destination taxability for certain cross-border transactions – Cross-border services have historically often escaped VAT collection in the country of the consumer.
  • Aggregator liability – With the increase of tax reporting or e-invoicing obligations across different taxpayer categories, tax administrations are increasingly looking for ways to concentrate tax reporting liability in platforms that naturally aggregate large numbers of transactions already.
  • E-accounting and e-assessment – Combining CTCs with obligations to synchronize entire accounting ledgers makes onsite audit necessary only in cases showing major anomalies across these rich data sources.

Says lead author and vice president of strategy at Sovos, Christiaan van der Valk, continuous transaction controls have emerged as the primary concern for multinational companies looking to ensure compliance despite growing diversity in VAT enforcement approaches.

Additionally, this year’s report includes a major review of the country and regional requirement profiles. These profiles provide a snapshot of current and near-term planned legal requirements across the different VAT compliance domains.

Finally, this report examines how governments have embraced digital transformation to speed revenue collection, decrease fraud and narrow VAT gaps. Digitization enables regimes to increase time to enforcement and enact stricter protocols, and consequently, businesses are forced to react with more stringent processes of their own to remain compliant.

Sales Tax Filing Checklist: 7 Questions for Compliant Returns

Properly submitting and filing a compliant sales tax return should be a top priority for any business. But it is not always that easy. If organizations don’t have all necessary information, are unaware of required reporting frequencies or have not correctly reported deductions, the sales tax filing process can be difficult – and could even lead to hefty fines or an audit. 

Whether you run a small business with one brick and mortar location or you oversee a large organization that has e-commerce sales in numerous states, your sales tax needs cannot be overlooked. There are varied regulations, jurisdictions and forms that need to be properly followed. Sales tax laws are evolving all the time, meaning you cannot assume that things will be the same from one year to the next. For example, the South Dakota v. Wayfair, Inc. Supreme Court decision has had widespread impact nationwide on how businesses must register, collect and remit sales tax.

The bottom line is: double check everything: from reporting frequencies to pre-payment obligations to valid exemption certificates and more.

This is especially important if you have expanded into new areas, whether it is a fresh jurisdiction in the same state or a new state entirely. Verify if any thresholds have been crossed and what additional sales tax filing rules must be followed. Business growth is great, but you want to make sure it does not come with overlooked sales tax filing requirements. 

Additionally, compile all data from each sales channel you have: brick and mortar, e-commerce and marketplace. Did your company integrate online sales into daily operations earlier this year? Have you started selling online into a new state, even if you only have one physical store? These will both likely require additional sales tax filing steps, and must be considered in your filing process. 

It is easy to feel overwhelmed as you prepare to file your sales tax returns, but you are not alone. It is okay to not know everything about filing compliant sales tax returns. But it is key to know that there are experts out there who are willing to work with you and make sure that everything is properly reviewed. 

That’s why we created this sales tax filing checklist, complete with seven key questions that your business should be able to answer on its way to filing a compliant return. Also be sure to reach out to our team of sales tax experts for even more information on staying up-to-date and ensuring that all of your bases are covered.

VAT Solutions From Sovos – Tax Peace of Mind

With the increasing intensity and diversity of continuous transaction control (CTC) mandates sweeping across the world, the challenges that international companies face today may well be among the most onerous in history.

The digital transformation journey that many tax authorities around the globe are taking is having a profound impact on how companies operate and comply with law.

And yet, the end of this tax revolution caused by varying forms of digitalization is not yet in sight. Many countries around the world, particularly in Europe, have just started their individual journeys toward CTCs. Many other countries, such as Chile and Brazil in Latin America that have had them for many years, continue to add new features – both to further close VAT gaps and to add interoperability and increase economic benefits to the foundations they have built.

Against this backdrop, multinational companies need a point solution that can grow with them. Sovos is a global leader in tax compliance with global coverage and local expertise processing billions of compliance transactions each and every year on behalf of our customers. 

Many companies, especially multinational corporations, feel lost among the rapid succession of CTC mandates around the world and don’t know how to avoid placing themselves in a costly and perilous corner by using a multitude of diverse local solutions. In working with such companies and their solution providers, we know how crucial it is for responsible executives to help all affected corporate functions cooperate toward forming and adopting a coherent approach that turns CTCs into an advantage rather than a risk.

Tax peace of mind

We provide our customers with complete tax peace of mind by providing the first complete global cloud solution for modern tax.  Our team or regulatory experts are constantly monitoring for regulatory changes across thousands of jurisdictions.

As more tax authorities introduce tax reforms to increase efficiency and close VAT gaps, we make sure our customers are prepared and able to meet the challenges that increased compliance requirements bring. We help them stay ahead of fast-changing government regulations allowing them the breathing space to innovate and grow.

Get ready for the digital transformation of tax

Our solutions are built into the business process platforms used today, including Grant Thornton, SAP, Oracle, and Magento, providing seamless integration with one global provider and a centralized global solution.

Sales Tax Compliance Readiness Assessment

Sales tax compliance should be a top priority for businesses. Federal, state and local regulations are ever-evolving, meaning companies can never assume that things will stay the same from one year to the next. Technology also evolves quickly, and businesses cannot afford to lag behind – failure to meet new sales tax filing obligations could lead to hefty financial fines or audits. 


Follow our Sales Tax Compliance Readiness Assessment below to make sure that your company has crossed every T and dotted every I on your path to compliance. And be sure to check out our multitude of resources for any questions you may have.

Why Untangling Tax Laws in Brazil is Beyond Difficult

If you have the responsibility for VAT determination and tax reporting in Brazil as part of your job description, you no doubt understand the levels of complexity involved in getting it right and ensuring VAT compliance.

Brazil has long been considered amongst the most difficult regions to achieve tax compliance. The country represents the most diverse landscape for VAT determination of any industrialized nation. The complexity of its fiscal rules and validations are increasing by the day, evidenced by the fact that since the Federal Constitution was enacted in 1988, nearly five million tax related laws and decrees have been issued. This is an issue that is costing businesses a disproportionate amount of time, money and resources.

Value-added tax is constantly evolving, and Brazil’s complex and rapidly evolving tax codes and regulations are making it increasingly difficult for businesses to remain compliant. Many companies are turning towards VAT tax software and automation technology to reduce the burden of managing these processes.

For a clearer explanation as to why Brazil has become so complicated and the sheer volume of VAT regulations and standards businesses are up against, we have put together this infographic, Untangling Tax Laws in Brazil is Beyond Difficult. This will help inform you as to where the Brazil market is headed and why it is so important to develop a tax strategy that is capable of keeping pace with consistent change, new VAT reporting standards and mandates and increasing demands on business to allow for stricter government oversight.

Sovos has considerable experience in providing VAT tax solutions for companies operating in Brazil. Our team of local, regulatory experts is second to none and our cloud-based tax solutions work seamlessly with existing technology platforms such as SAP.

If keeping current with changing laws in Brazil is creating an undue burden on your organization and remaining compliant with VAT tax mandates has become more a matter of hope rather than a probability, we invite you to talk to our team of experts.

We will work with you to identify your areas of greatest exposure and design a VAT tax solution that meets the needs of your operations in Brazil and also has the capability to scale to meet the needs of your organization globally.

The continued digitization of tax has made it imperative that companies keep pace with changing regulations in real-time. Falling behind is not a viable option. If your organization could benefit from another look at your tax management processes in Brazil, take the time to talk to Sovos.

Why Partner with a Certified Service Provider (CSP) for Sales Tax Administration

Certified Service Providers (CSPs) allow businesses to outsource most sales tax administration responsibilities, making it easier to comply with the laws of a given jurisdiction.

Choosing a CSP to manage your sales tax filings reduces the burden of managing end-to-end sales tax compliance while reducing organizational liability during the tax calculation process.

In Focus: Greece’s Upcoming VAT Reform

Greece is introducing a tax reform to increase efficiency, prevent fraud and close its VAT gap by digitising its tax system. Although 1 October 2020 had been the intended date for mandatory participation, late changes announced by the tax authority meant only some taxpayers were obliged to use it during 2020. For others, participation during the first three months has been voluntary. The date was postponed by the Greek government to 1 January 2021, and has since been delayed further and will now not be mandatory for all until 1 July 2021.

A collaborative environment

The new platform offers a collaborative environment where the data provided by businesses to the IAPR will not affect their own books but will also often auto-populate their trading partner’s tax records in myDATA.

The aim of the reform

Apart from the benefits of the digital tax transformation for businesses, the reform enables the Greek government to have increased visibility over business and financial data and impose audits or penalties where discrepancies arise.

All Greek established companies in scope

All companies established in Greece that maintain their accounting records in line with the Greek Accountant Standards regardless of their size, form, or their type of accounting books are all in scope and are affected by the reform.

Central to the new reform is the IAPR’s e-books scheme, myDATA, which means my Digital Accounting and Tax Application.  It requires trading partners to report a series of accounting data, captured within 17 types of documents under 52 different account classifications, to the IAPR’s digital platform.  The IAPR’s digital platform has the same name as the scheme.

Infographic: Top 10 VAT Compliance and Reporting Lessons from Latin America

Pioneering Latin American countries have led the way with VAT initiatives that rely heavily on technology for compliance and reporting. This gives governments greater visibility into business transactions. Download our infographic for the 10 lessons learned from Latin America’s initiatives that can help companies in Europe prepare for tax reporting changes.

Why Sales Tax Partnerships Matter

Selecting the right tax partner is key to effectively managing the complexities of modern tax environments. See the key traits that make a successful partnership.